Trump’s tariffs

By Carmel Crimmins, Reuters Econ World podcast host

Hello there,

The U.S. jobs market has started the year in better-than-expected form. Employers added 130,000 jobs last month, nearly double what was forecast, and the unemployment rate fell to 4.3% despite an increase in the participation rate.

The data means that a Federal Reserve interest rate cut is now not expected until July at the earliest. But this isn't a labor market in buoyant form. The growth is off a low base – revisions showed the economy added only 181,000 jobs in 2025 instead of the previously estimated 584,000. That is a fraction of the 1.5 million jobs added in 2024, the final full year of former President Joe Biden's term. Plus, the January jobs growth was not broad-based but concentrated in healthcare and social-service industries.

A stabilising labor market is still good news for Republicans as they head into the midterm elections. The economy is clearly a worry for them. The Republican-led House voted this week against President Donald Trump's Canada tariffs. The vote is symbolic – it's unlikely to become law – but it is a rare rebuke of Trump and highlights lawmakers' concerns about the White House's economic agenda.

Last month, the Yale Budget Lab said the annual median cost of the Trump administration's tariffs stands at around $1,400 for each U.S. household. The nonpartisan Tax Foundation estimated the cost at $1,000 per household in 2025, rising to $1,300 this year.

Trump's economic policies are also putting more pressure on government finances. The Congressional Budget Office this week hiked its estimate for deficits for the coming decade by $1.4 trillion, thanks in part to tax cuts and reduced immigration. Discretionary spending cuts, including those from the much-touted informal Department of Government Efficiency, are dwarfed by the growth in interest costs on government debt, which are set to more than double to $2 trillion by fiscal year 2035 from $970 billion in fiscal 2025.

The nonpartisan budget referee agency also projects only a nominal GDP boost from artificial intelligence productivity gains, about 10 basis points per year. This cuts back a linchpin of the Trump administration's demands for lower interest rates, which have also been adopted by Federal Reserve Chair nominee Kevin Warsh.

The math isn't looking great for Keir Starmer either.  Britain's economy barely grew in the final quarter of 2025 as activity fared worse than initially estimated during the run-up to finance minister Rachel Reeves' budget. The period was marked by rampant speculation about tax increases and some recent data have suggested that uncertainty has lifted for consumers and businesses. But could recent political uncertainty see that reverse?

Prime Minister Keir Starmer has had to fight to keep his grip on Downing Street this week due to fallout from the Jeffrey Epstein scandal and the economic numbers do little to bolster his case.

And finally, Valentine's Day is around the corner so we thought we'd dive into the economics of dating apps for the weekend that's in it. Hear why relationship advice is the big industry prize and what attribute people lie about most. Listen here.

As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.  

The CBO said the U.S. budget deficit for fiscal year 2026 - Trump's first full fiscal year in office - will remain at a whopping 5.8% of GDP. While that's where it was in fiscal year 2025, the report said current policy settings mean it would average 6.1% over the next decade and reach 6.7% in 2036.

" It's the natural trajectory of dating apps. They'll start free to attract people in. Once they've stocked the shelves with people, then they can start charging."

Mark Brooks, President of the Internet Dating Excellence, on the latest episode of Reuters Econ World.

On this week's show, we go deep into the 'dating app paradox' and what happens when pleasure becomes business.